Crops Analysis | March 28, 2022
Price action: May corn futures closed down 5 1/2 cents at $7.48 1/2 and nearer the session high. December corn lost 4 1/2 cents at $6.64 1/2.
Fundamental analysis: A risk-off day in the overall marketplace hit many commodity markets today, including the grains. Covid is again surging in parts of China, with its major city of Shanghai being forced into partial shutdown. Nymex crude oil fell by over $7.00 a barrel today, to set the negative price tone for much of the raw commodity sector.
USDA this morning reported a daily corn sale of 127,920 MT to unknown destinations. Weekly U.S. corn export inspections totaled 1.607 MMT (63.3 million bu.). That was up from 1.497 MMT the previous weekly but down from 1.789 MMT this week last year. From now until the end of the current marketing year, weekly corn inspections need to average 44.8 million bu. per week to meet USDA’s export forecast.
Also a negative element for the corn futures market today is forecast beneficial rains in Brazil’s corn-growing regions. World Weather today reported much of Brazil will see a good mix of rain and sunshine the next two weeks, which will benefit the safrinha corn crop. World Weather said the safrinha corn will have plenty of moisture through much of April.
Traders are gearing up for Thursday’s USDA Prospective Plantings and Grain Stocks Reports. Trading is likely to be quieter heading into that report and then be very active in its immediate aftermath. While much attention is on U.S. planting intentions, March 1 corn stocks could be a market mover, as the range of pre-report estimates from a Reuters survey is a wide 457 million bushels.
Technical analysis: Corn futures bulls have the solid overall near-term technical advantage amid continued choppy and sideways trading at higher price levels. Corn prices are still in a six-month-old uptrend on the daily bar chart. The next downside target for the bears is closing May futures below chart support $7.25. The next upside price objective for bulls is to close May prices above solid chart resistance at the contract high of $7.82 3/4. First resistance is seen at Friday’s high of $7.55 1/4 and then at $7.62 1/2. First support is at $7.40 and then at $7.35.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Fundamental analysis: Soy complex futures got caught up in the broad-based selloff in asset-based markets today amid increased Covid concerns in China. The rolling lockdowns that will take place in Shanghai sparked concerns about impacts that could have on global supply chains and economic activity. As a result, funds were active sellers in the soy complex today.
Weekly soybean export inspections totaled 628,819 MT (23.1 million bu.), which was within expectations. That was up from 553,582 MT the previous week and 450,807 MT during the same week last year. Soybean inspections are running 20.0% behind year-ago, whereas USDA forecasts a 7.6% decline. The required weekly pace to hit USDA’s export forecast of 2.09 billion bu. declined to 18.8 million bushels.
Outside market activity drove price action today, but focus will eventually shift to USDA’s March planting intentions and March 1 stocks figures, which will be released on Thursday. Traders expect U.S. soybean acreage to rise about 1.5 million acres from last year to 88.727 million acres, based on a Reuters survey. But the range of estimates is wide from 86.000 million to 92.208 million acres. There’s also a wide range of March 1 stocks, from 1.602 billion bu. to 1.965 billion bushels. The wide ranges of estimates increase odds of a strong price reaction.
Technical analysis: May soybean futures remain in the choppy to higher price range and today’s sharp losses didn’t do any significant chart damage. Near-term resistance is layered from last week’s high at $17.36 1/2 to the contract high at $17.59 1/4. Near-term support is layered from $16.38 to $15.79.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 95% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.
Price action: Wheat futures posted sharp losses and finished near session lows. May SRW wheat plunged 45 1/4 cents to $10.57. May HRW wheat fell 40 1/4 cents to $10.70 1/2. May HRS wheat dropped 24 3/4 cents to $10.79 1/2.
Fundamental analysis: Wheat futures faced strong pressure from outside markets tied to renewed Covid concerns in China and impacts that could have on global economies. As a result, funds were active sellers in the wheat markets. The low-range closes set the market up for followthrough selling on Tuesday, though much of that will be determined by how outside markets perform.
A couple of weather disturbances will move across U.S. HRW areas this week with shower activity, according to World Weather. Enough precipitation is expected in the east for some increase in topsoil moisture; however, a change in drought status in the west is not expected. The precipitation will support some additional crop development and follow-up moisture will be very important later in April.
Weekly wheat export inspections totaled 341,191 MT (12.5 million bu.) for the week ended March 24. That lowered the weekly required pace to hit USDA’s export forecast of 800 million bu. to 11.8 million bushels.
Technical analysis: May SRW wheat futures remain in the two-plus week sideways range that formed after the contract pulled back from the surge to its highs. Support at the bottom of the range is at $10.31 3/4. A drop below that level would open the door for a pullback to at least $10.00. Resistance at the top of the sideways range is at $11.69 1/4.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.
Price action: May cotton futures closed up 317 points at 139.07 cents and nearer the session high. May futures hit at another contract and an 11-year high. December cotton futures closed down 44 points at 111.30 cents.
Fundamental analysis: Bull spreaders were active in cotton futures today. The gains in nearby May futures were especially impressive given the risk aversion in the general marketplace and the big losses in crude oil futures.
Cotton traders will continue to examine the key outside markets for their daily price direction. However, Thursday’s USDA planting intentions report is coming into keener focus and may make for quieter trading until the 11:00 a.m. CT release of the report. Traders expect to see USDA peg U.S. cotton planted acres at 12.007 million, up from 11.220 million in 2021, based on the Reuters survey.
Weather in U.S. cotton country, especially in dry areas of Texas, will also become more of a markets factor in the near term. USDA weekly crop condition updates begin in April and will be closely followed.
Technical analysis: Cotton futures bulls have the strong overall technical advantage. The next upside price objective for bulls is to produce a close in May futures above solid technical resistance at 145.00 cents. The next downside price objective for bears is to close prices below solid technical support at 125.83 cents. First resistance is seen at 140.00 cents and then at today’s contract high of 141.80 cents. First support is seen at 136.50 cents and then at today’s low of 134.05 cents.
What to do: Get current with advised 2021- and 2022-crop sales.
Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.
